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How is property divided in North Carolina?

If you are considering divorce, you may be wondering if North Carolina is a common law state, in which all property acquired during the marriage is divided equally, or if the state uses the concept of "equitable division."

According to state statute G.S. 50-20, North Carolina practices "equitable division" of property. This means that some property will be divided evenly between spouses and some will not, depending on the circumstances surrounding the acquisition of the property and many other factors. The three categories that the court systems use to designate property are marital, separate, and divisible.

Marital property

The North Carolina court system determines what is marital property and what is divisible property. The court ensures that all marital property and divisible property is divided equally between each party.

Marital property consists of all real and personal property that is acquired by either spouse during the marriage but before the date of separation. This includes real estate, vested and nonvested pensions, retirement benefits, and other forms of deferred compensation.

Separate property

Separate property includes all real and personal property that is acquired before marriage or that is granted as a gift or inheritance to the individual during the marriage. Property that is gifted from one spouse to another will only be considered separate if that was the intent at the time the gift was made.

Divisible property

Divisible property is more complicated to determine as it includes items such as the change in value of marital property that occurs after the date of separation but before the property is distributed by the court, unless the change in value occurs as a result of post-separation activities of one or the other spouse.

Also included in divisible property is any property or property rights, such as commissions, bonuses, and contractual rights, that were acquired by either spouse during the marriage and before the separation, but not received until the period of time between the separation and the distribution by the court.

Other items considered to be divisible property are passive income (i.e. interest and dividends) and any increases or decreases in joint debt and its related interest.

In order to ensure that the marital and divisible property is divided equally, the court considers several factors such as income, property, and liabilities at the time the property is to be distributed. Other circumstances include, but are not limited to, obligations from a prior marriage, the length of the marriage, the age and health (both mental and physical) of each party, and the needs of the parent with custody of the children.

Before, during, or after the marriage a valid and binding agreement may be entered into for the division of property that both spouses consider fair.

If you are considering divorce it is important to understand the laws surrounding the division of property in North Carolina. For guidance on how to protect your interests, contact an experienced divorce attorney.